PenCom plans dedicated funding for state pension bureaus

The National Pension Commission (PenCom) is initiating a strategy to establish dedicated revenue streams for state pension bureaus, aiming to significantly improve sub-national compliance with the Contributory Pension Scheme. This move seeks to incentivize state governments to fully adopt and enforce the scheme across the country.

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We will explore ways to create income streams for state pension bureaus. It might not be in the exact form they are prescribing, but we will certainly do something.

PenCom's Director-General, Omolola Oloworaran, acknowledged the funding and operational challenges faced by states. "We will explore ways to create income streams for state pension bureaus. It might not be in the exact form they are prescribing, but we will certainly do something," she stated, indicating a commitment to finding sustainable financial solutions.

Oloworaran expressed deep dissatisfaction with the current low compliance rates, noting that only eight out of 36 states have fully implemented the scheme. She described the situation as an "F9" and urged governors to demonstrate greater political will to protect their workforce's retirement future. The commission also highlighted critical issues such as state governments deducting pension contributions from salaries but failing to remit them, thereby exposing retirement funds to significant risks.

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I am not satisfied at all with where we are. If you were to rate it, we still have an ‘F9.’ We still have only eight states out of 36 states complying. There has to be more political will. Governors must prioritise their workers and their future when they retire, not just worry about today. All 36 states should be under the Contributory Pension Scheme

PenCom warned that such practices, where deductions are held in general government coffers, could lead to diversion of funds, especially during leadership transitions. Oloworaran emphasized that storing worker deductions in state accounts is unacceptable and could result in escalating pension obligations and a compromised retirement system.

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In my personal opinion, deducting funds from employees and putting them in a state account is something that should never happen. Any incoming governor who doesn’t understand the original purpose of those funds could divert them elsewhere. That results in pension obligations skyrocketing and leads to a broken s